Thursday, February 04, 2016

Council's Budget II - What do the Figures Mean?

At the very heart of Darlington Council’s appalling difficulties (and those of every other Local Authority in the North East) is the scale of the Government grant that has been taken away since 2010 – cuts that will be compounded between now and 2020.

So here are the facts:

Between 2010/11 and 2015/16, DBC’s Government grant was cut in real terms by £37 million (a 47% reduction.) Councils are a “people” business, with a heavy reliance on staff to deliver the services. To date, 572 full-time jobs have been lost.

To achieve those savings, like other council’s DBC has tried to protect front-line services. There have been significant management savings, and the Xentrall collaboration with Stockton BC saves over £2 million a year in ‘back office’ efficiencies (operation of IT, payroll and the like.)

Still some high profile areas of Council spend have had to take a hit. People will think of the Arts Centre, but those savings have been realised across the Authority.

Between now and 2019/20, Tory Government cuts mean that a further £12 million will have to be saved. With efficiencies already squeezed dry, options are extremely limited.

Over the next few weeks and months, you will probably read a lot about Councils and their ‘Statutory services’. This relates to those things that councils have to do by law. We estimate that there are 1,300 “legal requirements with which councils like DBC have to comply.

Why is this so important now? Because Government grants (which will probably have been phased out altogether by 2020) plus Council Tax barely meets those legal requirements. They include key elements of Children’s and Adults Services (child protection, children in care, school transport for example) some maintenance of the highways, a bin collection, a library service (but to what level is not said), planning. There are some others.

What isn’t ‘Statutory’ is a much, much more extensive list. Regrettably, it includes council services which are at the very heart of our community, and about which people immediately think of when they imagine what a local council “does”.

Working with families and children in need, support for the voluntary sector including charities, leisure (the Dolphin Centre and Eastbourne Complex), much of the library service, the maintenance of parks, gardens and open spaces, museums (like the Head of Steam). Even lollipop men and women aren’t required by law. Councils don’t have to provide them.

Of course, DBC (like the vast majority of all councils) wants to provide these services to a good standard. That’s why they’re there in the first place – because they have been demanded by local communities.

But now, the impact of austerity is so overwhelming, that they are almost completely unaffordable. Locally-raised Council tax and Government grant dwindling to nothing, simply doesn’t bridge the gap.

So this draft budget which is now out for consultation only provides for those ‘Statutory’ services. Because of the hard work done over the years, there is an additional £2.3 million to allocate to the most vital services. The Council’s Cabinet is suggesting that some provision for the most needy be included, that school crossing patrols be protected, that our town’s heritage be preserved by continuing to invest in the Head of Steam museum, that at least some of the cuts to Street Scene not be made. Also there is money for economic growth, because we must continue to bring good quality jobs and investment into the town.

A lot has to change, however. Somehow, enough has been found to keep the Dolphin Centre, but only by including within it the new library (moved from Crown Street) and incorporating a Children’s Centre. The news today has been dominated by the particular impact on the Covered Market.

How should we feel about this carnage? First and foremost, we should be angry! Bloody angry!! The Tories have no love for local government, they know that councils tend to take the blame when Government cuts have to be delivered locally, and they are cynically exploiting that. It is grotesquely unfair. Key services which the neediest in our society rely upon are suffering. Key local facilities are disappearing, and all because Westminster Tories don’t give a toss about anyone north of the Watford Gap.

Yet somehow, we should remain hopeful too. Darlington is still a great place in which to live, and in which to bring up a family. The Feethams multiplex/hotel/restaurant/multi-storey care park development shows that the town centre is on the up. Highly-skilled jobs and investment continue to come into town. Darlington will survive this terrible period.

Of course we should protest! Sign the petition to Government created by Peter Barron demanding that the Government reassess its terribly unfair spending formula for Darlington. Lobby our MP to give her the maximum authority when she challenges Government Minsters. Write letters. March.

But take time to look at the Council papers too, and have your say on the proposals. Should the Council continue to invest in the Dolphin Centre, school, crossing patrols, economic development and the railway museum, or should they cease and other priorities be found?

Sounds like an impossible choice? It is – but that’s the inescapable reality facing Darlington between now and 2020. Unfortunately, there’s no place to hide.

20 comments:

The council fund numerous voluntary sector service, however these services often overlap.For example a client who is experiencing mental ill health is homeless, gay and may have experienced domestic abuse may be referred to three agencies : DISC for mental health, first stop for homelessness, GAD and harbour for Domestic Abuse. However within these services staff often have the skills to solely provide that support, this also benefits the client 'tell my story once'. I would amalgamate all the services in a 'one stop shop' and use the experience of all services

Council leaders across the NE have more or less accepted these cuts by agreeing officially to a more devolved approach. In a rush for power, they will now need to submit to the fact that central government is in a position to blame LAs for how, when & why they allocate funds. This political masterstroke, which bears similarities to how the poll tax rates could be set by Labour councils, means central government can blame Labour councils for cuts. Only the people whom rely on those LA services suffer.

Secondly, these cuts, posited as they are in the guise of austerity, are nothing else than central-government driven, small-state ideology. Labour made their bed here in the run up to GE 2015. How much did we hear about the potential impact of cuts, or their ideological nature during the campaign? LAs, and by default the country, are suffering and will suffer for the foreseeable, because Labour offered no real alternative to austerity. In principle, the electorate agreed with the need to save and invest but their were some pretty tame, if not weak proposals for alternatives to the Tory axe. They were certainly be no means radical.

Nick's call to action is of course needed here. However, let's not forget the current & previous party political circumstances that got us where we are. It's time to start shouting 'we've had enough'.

I agree with most of this but there can be no doubt that Darlington as a small Local Authority needs to look very carefully at its big earners. Many jobs have been lost virtually all our schools are academies so can some of the higher paid jobs not be merged with neighbouring councils. Do we need the Head of Steam and is it justified by visitor numbers ? Yes we need clean streets so why cut Street Scene when it contributes to a nicer environment but not Head of Steam ? Will moving a beautiful library into a leisure centre not cost money ? One thing is certain this proposal was designed to shock and create headlines. Only time will tell whether it was or was not scaremongering .

LeaderWBC says...As Leader of Wokingham Borough Council can I provide some facts. The government uses a concept of "Total Spending Power" to decide what levels of grants councils receive. On 2016/17 Darlington has a figure of £78.5M of which £36.9M comes from government grants. The difference of £40.7M comes from your residents as Council Tax. That is 48.1% of spending comes from the government.

In contrast, Wokingham for 2016/17has a figure of £108.9M of which £23.9M comes from the government. The difference of £83.4M comes from our residents as Council Tax. That is 23.4% of spending comes from the government.

If you roll forward to 2019/20 the figures for Darlington are:spend £81M; grants £31.1M (a reduction of £5.8M) and 42.9% of spending comes from government.

The figures for Wokingham are: spend £109M; grants £9.8M (a reduction of £13.1M) and 15.8% of spending comes from government.

These are straight from the government documents and are freely available on their website. So over the 4 year spending period Darlington loses 15.7% of their grant compared to Wokingham losing 54.8% grant.

By any stretch of the imagination the figures do not indicated Darlington has been unfairly treated compared to Wokingham!

Thanks for your comments everyone. In no particular order, I'd respond as follows:

Wokingham

In fact, Wokingham is about 50% bigger than Darlington (according to Wikipedia.) Darlington remains the third smallest unitary authority in England (after Rutland and Hartlepool), and this disadvantages the Authority, as it robs us of economies of scale which larger councils enjoy.

Wokingham is quoted because it's an example of how Local Authorities in other parts of the country are favoured by the way in which the Tory Government has skewed the grant formula to help its heartland areas.

I take at face value the apparent quote from the Leader of Wokingham Borough Council. What he doesn't mention is how the operation of the formula really hurt urban, relatively-disadvantaged councils between 2010 and 2015.

John - yes it is the case that Darlington (and other North East authorities) have been treated unfairly. We are doing more work on the Wokingham comparison, but to give a concrete example, £150 million of transitional grant has just been announced for certain Authorities. For Wokingham, this means they will receive an additional:

2016/17 £2.109m 2017/18 £2.104m 2018/19 £3.350m.

Only one North East Authority has been given access to this transitional relief - Northumberland. Otherwise its a long list of Tory shires - Surrey, Hampshire, Gloucestershire and the like. Nothing for Darlington.

Garrie - for the most part, I accept your analysis. All too often before the General Election (and I'm afraid since) the Party in Westmnister has shown little interest in the plight of local services. Sometimes I feel (perhaps unfairly) that Labour MP's have swallowed the Tory line that the level of spending reductions to local government is acceptable because there is so much "waste". Of course I exempt from this Jenny and Phil, our local MP's who have worked hard with us, but otherwise the support from the national Party is dispiriting.

As you say, the unwillingness to talk about local government in the General Election was just another missed open goal.

You're also correct that the Tories have consistently devolved powers to local government, only to cut and cut again the spending that should accompany those services. Public health spending is a case in point, as is Council Tax support.

That begs the question - why on earth are Labour councillors signing up to devolution deals when the Tories have such malign form on this issue? Frankly, it's because it's the only show in town, and the funds (however paltry) do provide an opportunity to grow our economies to some extent. On balance, it seems to me to be the right thing to do.

David - DBC has tried to share costs with other neighbouring authorities, but as they say, it takes two to tango! Our most fruitful partnership has been with Stockton, where the Xentrall initiative dealing with back-office costs saves for Darlington alone over £1 million a year.

As far as these proposals are concerned, yes moving the main library into the Dolphin Centre will incolve one-off capital costs, but the move will save £400,000 each year (hopefully it will also deliver a better-used library service.)

Is the Council right to contiue funding the Head of Steam in these incredibly difficult circumstances? - I'll be blogging on this soon, but once the museum is closed, the service is gone. The town will never see Locomotion No. 1 again (which is owned by the NRM) and the collection will be broken up. There is so much potential at North Road, both in terms of economic development as well as heritage/tourism, that it would be profoundly short-sighted in my judgement to close it now. Darlington remains known the world over as the birthplace of the railways - we must do everything we can not to squander our inheritance.

To be clear, though - this isn't scaremongering. The cuts about which the Council is consulting will go ahead - and if they don't, then other discretionary services which the council has prioritised (like the Dolphin Centre or school crossing patrols) will have to end entirely. That's how bleak things are.

I take the point about grants to the voluntary sector, but contracts which are let here are shaped by those organisations themselves. The Council is doimng everything it can to mitigate the impact on the most vulnerable, but inevitably these cuts will bite deep with this sector.

Finally, on the salary of the Chief Executive - I understand that this is a long-running gripe (and this is the case in most councils.) Just to stress, Darlington's senior management costs are lower than in most of the rest of the North East per capita, and this budget takes a further £300,000 out of senior management costs.

To run an organisation as large and diverse as a unitary authority, however, you need the highest calibre of public sector professional. It may be the case that you could accost someone on High Row who would do it for £70,000 or less - would they be able to manage the current terrible cost reductions whilst keeping key public services going and attracting tens of millions of pounds of investment into the Borough? I really, really doubt it!

The one thing that hasn't been pointed out here is that all this is related to the council tax changes back in the early 1990s. The use of standardised council tax bands alongside the desire to keep a fairly standard rate across those bands throughout the UK means that Darlington (where the typical house is probably council band B) receives far less tax revenue than Wokingham (probably tax band D).

This meant that Darlington always received a far bigger top-up grant from central government compared to those councils down douth. Now that grant is being cut Darlington and other councils up North are suffering greater cuts.

Of course because no one looks at the past no one remembers the simple reason why grants are far higher up north than down south. Given how simple it is perhaps you could add it to any letters to the HM Treasury as it appears they conveniently forgot that this entire issue is due to funding decisions they made 25 years ago....

Further to my previous post, i appreciate you will be a very busy man at the moment.

Could you please reply and advise where your numbers come from.

Also do you still stand by your comment re Wokingham in the fact that it is larger than Darlington. Jenny Chapman had some speaking time in parliament yesterday and she said that Wokingham is the same size.

Who do we listen to with regards to matching apples with apples or making the fair comparison?

I guess we'll just have to agree to disagree about the relevance of Wokingham - I think the comparison makes the point rather well about the extent to which this Government favours its own heartlands in the south, at the expense of deserving areas in the big cities and in the north.

The job stats have been provided by the officers. They estimate that around 150 further jobs will be lost over the next 4 years.

Regarding what the council did and didn't know in February 2015 - well in between there has been the small matter of a General Election. There was little point drafting detailed further cuts when the identity of HMG was not clear. Who formed the next Government was clearly very relevant to the future of local government - for the worse, as we have learned since!

It was only before Christmas 2015 that the Government finally gave us a detailed idea about the future of the grant between now and the end of the Parliament - indeed its effective phasing out. That wasn't plain before. Maybe you can point me to the section when the Tories revealed in their 2015 Manifesto they would be slashing and burning local government spending between now and 2019 - because I certainly can't find it!

You are correct with regards to the Conservative manifesto not including the details of LG spending but everyone knew there were hard times ahead.

DBC have taken guidance from the LGA and incorporated those forecasts of RSG to 2019/20 for the last 3 years.

The current medium term plan forecast to 19/20 is not that different with regards to this funding.

That's is why I made the comments I did, why wasn't the subject matter brought forward re the closure of the library and unknown situation re the Indoor market.

When looking at the councils expenditure between 15/16 and 16/17 from an analytical review perspective you have to ask why spending on Adult and social care and children has gone up. Also why the huge hike in human resources, if less employees then why higher costs taking also into account the majority or work re redundancy has already happened.

Now some is being met by the 2% precept from the council tax but the rest looks to be taken from other areas.

One would hope this isn't just throwing money at the damning reports the council has received in this area.

Other questions would be why does the Dolphin centre run at a massive loss, why look to loose the markets when the generate an annual profit of 300k.

With regards to the latter the council has been happy to generate this profit without re investing that into the building itself that is shocking to be fair.

With regards to the job losses it is very sad my comments were made as the DBC own information only shows FTE reduction in jobs of 430 for the same period.

About Me

Labour Councillor for Haughton West ward 1991 - 2015. Councillor for Haughton & Springfield ward 2015 - Married to Sandy with two boys, James and AJ.
Cabinet Member for Leisure & Local Environment on Darlington Borough Council.